ATLANTA -- With the recent snow storm in Georgia, the Weather Co. found a big story right in its backyard. A correspondent stood outside the channel's Cobb County, Ga., headquarters to report the snowfall. Workers shot footage of nearby commuters trapped in the gridlock.
To CEO David Kenny, this storm, which the Weather Channel dubbed Leon, proves why the network still matters.
Kenny is counting on viewers to see that.
The Weather Co., parent company of the Weather Channel, is now facing arguably its biggest challenge in its 32-year history.
The network last month couldn't come to an agreement with El Segundo-based DirecTV. The major satellite carrier demanded a reduction in the fee it pays to air the Weather Channel. The Weather Channel wanted a small increase. "There was never a negotiation," Kenny said. "It was a 'take it or leave it' position."
On Jan. 13, DirecTV blacked out the network to its 20 million subscribers -- or one-fifth of the Weather Channel's audience. DirecTV said the Weather Channel's price is too steep, given its declining ratings. People's habits have changed, DirecTV officials said. They spend more time checking weather on their smartphones than on TV.
The Weather Channel decided to fight back aggressively. The network called DirecTV's move a public safety concern, saying subscribers are being deprived of potentially life-saving information. Weather Channel officials encouraged fans to contact their congressional representatives to express outrage.
"We're a good value," Kenny said. "It's a network a quarter of the population watches every day, yet we don't charge very much."
The Weather Channel mobile application is the seventh-most popular app of all time on the iPhone and second most popular app on the iPad, according to Apple. Its website received 61 million unique visitors in December 2013, making it one of the top 25 most popular websites in the U.S., according to comScore.
Data research firm SNL Kagan estimates the network charges carriers 13 cents per subscriber per month and was seeking an extra penny from DirectTV.
DirecTV, according to the Wall Street Journal, was seeking a reduction of about 20 percent, which SNL Kagan recently said could reduce the network's annual cash flow by about $40 million or 24 percent since such a cut would impact deals with all distributors.
The Weather Channel costs DirecTV relatively little compared to networks such as TNT ($1.21 per month) or TBS (59 cents) and ESPN ($5.06), according to SNL Kagan estimates from 2012.
Then again, the Weather Channel doesn't draw as many eyeballs as those networks. This month, the station ranked 54th among all basic cable networks with 237,000 viewers, comparable to CMT and Oxygen.
William Lee, a telecommunications professor at the Grady College at the University of Georgia, said both DirecTV and the Weather Channel are facing basic challenges to their business models. Cable subscription fees have risen far in excess of inflation for many years, and people are beginning to resist. Cable/satellite penetration peaked in 2010 and has started to drop.
He thinks DirecTV has more leverage in this showdown. "The Weather Channel is not ESPN," he said. "It doesn't have that type of must-see programming. If DirecTV cut ESPN, they'd lose a lot of subscribers quickly."
DirecTV declined to comment beyond public statements.